Parents, homebuyers win in NSW budget

NSW is set for record spending on health and education infrastructure.

First homebuyers, hospital patients and school children will enjoy the spoils of the rivers of revenue flowing to NSW from a white-hot property market and asset sell-offs.

Along with a healthy $4.5 billion budget surplus for 2016/17, Treasurer Dominic Perrottet said the state is expected to remain in good shape in coming years.

"This budget is the envy of the Western world," Mr Perrottet declared on Tuesday.

Thanks to stamp duty revenue and the capital raised by better-than-expected sales of the state's electricity networks, the state's coffers are predicted to remain firmly in the black for the next four years.

The surplus is forecast to drop to $2.7 billion in 2017/18, with growth to average 1.8 per cent over the forward estimates.

Flush with cash, Mr Perrottet will set aside $72.7 billion for state infrastructure over the next four years, with an extra boost for schools and hospitals.

An estimated $2.2 billion will go towards 123 new and upgraded schools to deal with surging student enrolments over the next five years.

The Prince of Wales Hospital in Sydney's east has been promised $720 million, following already-announced upgrades for Campbelltown and Concord hospitals.

Other sweeteners include $1.3 billion for regional infrastructure, $100 million for palliative care, and a measure Mr Perrottet described as the "soul of the budget" - a new $100 rebate for school-aged children to spend on recreational sport.

A large chunk of revenue will continue to be diverted to the government's ambitious roads and rail programs, with the controversial WestConnex project to receive a whopping $3.2 billion.

Struggling first homebuyers are due for some relief, with stamp duty scrapped on existing and new homes up to $650,000.

The only losers are foreign investors, who will be slugged with higher fees and taxes to help raise the $1.5 billion needed to pay for tax cuts.

Premier Gladys Berejiklian, who handled the books just six months ago, heaped praise on the new treasurer's budget.

"Not only is he the best treasurer in Australia, he is the best treasurer of the Western world," she told parliament.

But Labor leader Luke Foley claimed the government muddled its priorities.

"This is a government that seemingly just isn't in touch with the cost of living pressures on families across NSW," he said. "People are battling."

Mr Foley said the government's announcements were "a cruel hoax", with most of the hospital projects not scheduled for completion until the mid-2020s.

Treasury documents, meanwhile, show there are "challenging" economic clouds on the horizon.

NSW will receive a smaller piece of the federal funding pie due to its good economic performance, with GST revenue revised down by $1.4 billion to 2019/20.

Mr Perrottet took a swipe at Canberra as he spoke of "record low" commonwealth funding.

"It's completely unfair on the state of NSW that we're paying a wages bill for the Queensland public service ... and are paying over $1 billion in 2021 for South Australians who can't even keep their lights on," he said.

More privatisations are in store to pay for future infrastructure, including the sales of the WestConnex and the state's stake in the Snowy Hydro scheme to the federal government.

"We embark on tough reform not for the sake of it," Mr Perrottet said.

"We want our state to be the best place to live, work and raise a family".